Australia will run out of money to pay for Medicare and its welfare and education systems unless the Abbott government takes a harder look at costs, says Treasurer Joe Hockey.

Mr Hockey said he was ''ringing an early warning bell'' about the sustainability of federal funding for vital programs, saying hard work will be needed in the future just to maintain the quality of life expected by most Australians.

''The starting point is if our health and welfare and education systems stay exactly the same, Australia is going to run out of money to pay for them,'' Mr Hockey told the Seven Network on Friday.

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''If nothing happens, we will never get back into surplus, we'll never pay off debt.

''We'll either have to have a massive increase in taxes, and that means fewer jobs at the end of the day, or we're going to have to look at ways we can restructure the system to make it sustainable.''

Illustration: Ron Tandberg

Mr Hockey said that Medicare was forecast to increase from $65 billion in this year's budget to $75 billion within just three years.

There's speculation the government could be paving the way for the introduction of a GP fee, although Prime Minister Tony Abbott has said he wants to be the ''best friend'' Medicare's ever had.

Policy consultant Terry Barnes, a former adviser to Prime Minister Tony Abbott, suggested a $6 fee to see a GP or for GP-type treatment at a hospital emergency department, in a submission to the government's Commission of Audit.

Health Minister Peter Dutton has also signalled that Medicare could be means-tested with access to bulk-billing and medical tests such as X-rays, blood tests limited to those on lower incomes, in a News Corp report.

Mr Dutton questioned why those on higher incomes should be able to go to the doctor ''for free'' and said it was ''one of the discussions . . . we have to have''.

But doctors have warned that the fee would lead more patients to seek treatment in overcrowded emergency departments including those with conditions that had deteriorated because of deferred care.

Opposition Leader Bill Shorten slammed the proposals on Friday, saying that people should be able to get ''the health care they need, not the health care they can afford'' and said Australians did not want to go down the path of the American model.

Australasian College of Emergency Medicine president Anthony Cross said any disincentive to see a GP would send patients elsewhere.

''EDs [emergency departments] do have a reputation of being able to see and treat anything - there is a sense of a one-stop shop - so if they have to pay $6 that might sway people to come to an ED,'' he said.

''People for whom the $6 is most likely to be a disincentive are people from poor backgrounds with chronic and psychiatric disease, the people who need care the most.''

Australian Healthcare and Hospitals Association chief executive Alison Verhoeven said the chronically ill were likely to defer seeing a GP, leading them to become sicker and need more treatment.

''That will obviously cost more and that's not a good trade-off, it's not going to put more dollars into the system,'' she said.

He said funding agreements between the Commonwealth and states prevented hospitals charging patients for public hospital treatment, and would need to be changed if the government adopted his plan for a $6 co-payment.

Mr Dutton said on Wednesday one of his government's most important tasks was ''to grow the opportunity for those Australians who can afford [it] to contribute to their own healthcare costs''.

He questioned whether people on ''reasonable incomes'' should expect to pay nothing to see a doctor leaving other taxpayers to pick up the bill.

In the second half of last year, 81.7 per cent of GP visits were bulk-billed, meaning patients incurred no out-of-pocket costs.

But, Consumers Health Forum spokesman Mark Metherell said, many bulk-billed patients received concessions, for example pensioners with chronic conditions, and other patients already paid a fee to see a doctor.

Patients who are not bulk-billed pay an average of $28.60 to visit their GP, according to Medicare data.

Victorian Council of Social Service chief executive Emma King said the poor already faced significant costs for quality healthcare including for medications and tests.

The Treasurer flagged that other programs, including the aged pension for people over 65, were also overdue for review and would have to be examined.

Mr Hockey said the pension was introduced in the 1950s when life expectancy was 55, but he said costs had ballooned with the average lifespan stretching today to 85.

799 comments

You know one way to avoid running out of money, raise taxes to what they have been in the past. Problem solved

Commenter

Reality

Location

Reality

Date and time

February 21, 2014, 12:09PM

well put up the Medicare levy Joe instead of inventing an additional charge for the poor - we can all contribute fairly via the levy Joe, why is the obvious solution being avoided?

Commenter

Martin

Date and time

February 21, 2014, 12:24PM

My Medicare Levy was $1750. My private health insurance $2200. Thats $4000 dollars per year to get health cover. I saw the GP 3 times last year at a total cost to the system of about $150.

So like you I'm sick to death about people like Dutton saying that the high income earners are getting free health care.

I pay and pay and pay, and get sweet FA, yet am still treated as if I'm rorting.

Commenter

Agent Smith

Date and time

February 21, 2014, 12:58PM

That $4000 represents less than 3.5% of your income. not much more than the average wage increase each year.

Commenter

DB

Location

Melbourne

Date and time

February 21, 2014, 2:27PM

Joe - here is a small part of the solution, start with yourself and your mates who are paid by us taxpayers:

The base salary for senators and members is $195,130 per annum from 1 July 2013On top of that, the annual allowance for parliamentarians is $136 640 per annum from 1 August 2010 - for this a well known Liberal MP employed his wifeOn top of that the electorate allowance is around $32000Additional electorate allowance of $19000 in lieu of private vehicleThen they have Life Gold pass, Resettlement allowance, parliamentary superannuationTony Abbott's salary is $507,000 (so was Rudd and Julia Gillard's); British PM's salary is half - $252,000Joe Hockey - about $410,000================================================Reduce your salaries by half, and let us know when you are doing that.

Commenter

Mick

Date and time

February 21, 2014, 12:27PM

Yes, it's about time the rich started paying tax again, instead of being subsidised billions of dollars a year by the Australian people.

Medicare, rights at work and education underpin our standard of living. Once you remove them, our standard of living will plummet. There is no truth that giving the rich all the money is going to make everyone richer. If that was the case, the middle class in Australia wouldn't have been shrinking so much. These policies are exactly why America has such a huge gap between the rich and the general population. The whole of free-market economics has been discredited.

Commenter

Tone

Location

Melbourne

Date and time

February 21, 2014, 12:28PM

Exactly! Reverse the unaffordable cuts imposed by The Rodent and stupidly copied by Rudd. Sadly these clowns would rather die than upset their wealthy supporters or get their own rorting snouts out of the public trough.

Commenter

Anthony

Date and time

February 21, 2014, 12:28PM

Raise taxes, get rid of middle class welfare, stop subsidising the extreme profitable mining industry. BAM - I just solved all of the Liberal Party's "problems". Instead of funneling money into the IPA, Business council of Australia etc. via "reviews" and "audits" please just give me the money thnx.

Commenter

Captain Great

Date and time

February 21, 2014, 12:30PM

Wealthier people already contribute more to Medicare than lower wage earners by virtue of the flat 1.5% levy. To now say, oh you've paid more for the service in your taxes, but now you have to pay again to use it, is an insult!

Rather, the Medicare levy should be increased from its current 1.5% to 2.5% or even 3.5% .. A figure that is not astronomical, and is reasonable for all taxpayers.

The UK, which through the NHS has a far more "universal health care" scheme than us has a levy of around 12%.

Commenter

rob1966

Date and time

February 21, 2014, 12:31PM

Spot on Reality. It's very simple, but this government has non idea. No country used austerity to achieve prosperity.